WDC PRESIDENT’S OPENING SESSION SPEECH - AGM, 8 SEPTEMBER 2016, NEW YORK

17 September 2016
WDC PRESIDENT’S OPENING SESSION SPEECH - AGM, 8 SEPTEMBER 2016, NEW YORK

NEW YORK, NY, September 8, 2016 — Honorable guests, Ladies and Gentlemen.
First of all, I would like to thank United States Jewelry Council and Mr Ronald VanderLinden personally for warm hospitality and great professionalism in organizing this meeting.


I am pleased to open the WDC annual general meeting and to tell you a few words about what we have achieved and what we should do in future.

For many years WDC successfully fulfills its mission - represents the industry voice in the Kimberley Process. KP has reached great progress during the 15 years of its operation. Today, more than 99% of all diamonds in the market have confirmed conflict-free origin. It means that the so-called "blood diamonds" are practically excluded from the market. Mining and trading areas in all countries are critically examined, and any buyer of rough diamonds gets a certificate, confirming that these stones are not associated with the conflict. Diamond mining and trading, which was known as a murky business in the 90s, is now an example to follow in the field of transparency. This is our great merit.


Without doubt, the KP has its own internal difficulties. Many KP participants complain about slowness in changes, the complexity of decision-making, putting the question on the effectiveness of the work done. This is not surprising, since KP brings together a huge number of different people, countries, cultures, philosophies, perspectives and approaches. Sometimes our internal differences spill over into the public, as it occurred in the situation between the CSC and the UAE. Reaching consensus is not always easy. Nevertheless, difficulties and crises finally allow the KP to evolve and become more efficient. The main thing is to be willing to have a dialogue, remembering that despite the differences we all work for a common goal.


The KP is not perfect, but it remains the only institution able to protect the market from conflict diamonds. It is the only mechanism that can physically stop the export of diamonds from conflict zones and rectify the situation in these areas. We have many examples of successful work. The latest example is the Central African Republic. A few months ago the diamond mining area of Berberati in CAR has been recognized compliant with the minimum requirements set by KP. Export of diamonds from that site was permitted under strict expert supervision provided by the KP. This is only the first step of CAR on the way back to the civilized market. However, the budget of this country will now receive at least some money from diamonds, which can help its economic recovery.


Resolving the situation in CAR confirms not only the efficiency of the KP, but also the important role WDC plays in protecting the market. WDC actively participated in the monitoring mission in the Central African Republic. We must continue this work, helping the KP and making it more effective. WDC should be fully involved in the daily work of KP working groups, carrying out review visits, compiling a database on mining geography of diamonds and their distinctive features and, if needed, providing assessment of rough diamonds value.


As I said, the success of KP allowed us to virtually eliminate conflict diamonds out of circulation. But that doesn't mean our job is done. Today, KP and WDC have a task to maintain a stable order in the diamond world, which is facing new global challenges.


These challenges are well known to you. First of all, it is the origin of diamonds. The global challenge of our industry today is to guarantee to the consumer that the polished stone he buys has non-conflict origin and produced in accordance with the responsible business practices. Sometimes I hear comments that the consumers are out of the scope of the KP or WDC mandate. But we must not forget that our market has a complex structure and it is impossible to consider one part apart from another.


By conservative estimates, the global diamond industry, stretching from mine to jewelry store, involves more than 10 million people. The diamond business is making a significant contribution to the development of regional economies, and sometimes entire countries. In Russia, it is the Republic of Sakha (Yakutia), the largest constituent entity in my country, in Africa it is such nations as Botswana, South Africa, Namibia, and here we should also mention regions of Canada, Australia, India (as the world diamond cutting center) and the US - the world’s biggest diamond consumer.


Diamond industry spends vast investments in exploration and mining, comparable with any mining operation. But unlike our peers in mining, we depend on the emotions felt by consumers, for whom diamonds are not the daily bread. Therefore, the mainstay of our business is in protecting our product's reputation. If the industry now faces the task of self-regulation, in my understanding WDC is the only industry organization, where this issue could be discussed in the representative format.


All of this means that we still have a lot of work. In April, 2016 WDC has adopted its first ever Strategic plan that will guide the work of the organization till 2020. During this session in New York, the WDC Board of Directors will continue to discuss the implementation of this plan. I am glad that we come to this important session with an already fully formed team.


We see two main areas for further WDC development. Firstly, it is a more intensive information activity, I would even call it educational. To develop in this direction, the WDC Strategic plan pays special attention to the communication strategy; and we will discuss it in details at the Board sessions.


We need not just to carry out the functions of an observer within the KP, but also to interact with public authorities of diamond producing and diamond consuming countries to explain how the industry operates. Many problems occur because of the banal lack of understanding. The same can be said about informing the society itself and non-governmental organizations. We need to move away from the stereotype viewing diamond mining as some closed industry. Once, this had been a problem, but the situation changed a long time ago.


I'm glad to see here not only WDC members, but also many industry stakeholders, NGOs, high-ranking government officials. I would like to stress once again that WDC is always ready to provide any necessary information and full assistance in matters of deep understanding of the market.


Second, the industry needs to think seriously about providing guarantees of origin for diamonds through the supply chain. The mandate of KP covers only rough export certification. But on the way from a diamond field to a retailer’s store the rough stone turns into a polished diamond bringing about a new and even more global problem - how to provide guarantees to the consumer regarding legal and non-conflict origin of polished diamonds?


We all know that WDC has introduced a voluntary system of guarantees, the System of Warranties (SoW). This is a declaration that the market stakeholders agree to respect the rules of responsible business practices in order to guarantee "clean" and conflict-free origin of their product to the consumer by extending the KP rules on polished diamonds. So far, SoW is a voluntary system, but we see how market stakeholders are joining it at their own discretion to assume these disclosure obligations. Our next task is to develop the System of Warranties in order to strengthen the industry’s support of the KPCS.


We will also continue discussion of the position of industry in the light of the forthcoming KP plenary session and also the upcoming revision of the minimum requirements of the KPCS due to start in 2017. I believe that WDC will take into account the analysis of previous review visits, KP established working practices and submit our proposals to the KP. In addition, I believe that, given the current situation, it would be correct if KP Observers – like WDC, DDI and CSC - were able to organize their special joint meetings on the margins of the KP sessions to discuss common goals and new challenges facing the industry.


I hope that our joint efforts will allow us to play a more active role in defending and supporting favorable reputation of the international diamond trade. It is important to form a global understanding of how the KPCS works and show its ability to evolve to become an ever stronger and effective forum capable of delivering on its goals.


I would like to use this opportunity to thank my predecessors, Mr. Eli Izhakoff, Mr. Avi Paz and Mr. Edward Asscher, who put a lot of effort to create the WDC and lead it to become the real supporter of KP and of the whole diamond world. I’d like to also thank all the WDC officers and Board members for the work you are doing now to take our organization forward. I wish all of us a productive and successful work here in New York.